US embassy cable - 05RABAT1768

UNCLAS SECTION 01 OF 03 RABAT 001768 
 
SIPDIS 
 
SENSITIVE 
 
STATE ALSO FOR NEA/MAG AND NEA/PI 
 
E.O. 12958: N/A 
TAGS: ECON, EAID, KMCA, MO 
SUBJECT: GOM PITCHES MCC ON DRAFT MCA COMPACT 
 
REF: RABAT 1070 
 
(U)  This cable is sensitive but unclassified.  Please 
protect accordingly. 
 
Summary: 
-------- 
 
1.  (SBU)  Summary:  On August 15 and 16, Prime Minister 
Jettou, Foreign Affairs Minister Delegate Fassi Fihri, and 
more than a dozen other Government of Morocco (GOM) 
officials gave a first glimpse of Morocco's draft Millennium 
Challenge Account (MCA) proposal to Millennium Challenge 
Corporation (MCC) Senior Director for Francophone Africa 
Michael Grossman.  The GOM's ambitious and complex MCA 
presentation embeds a proposed USD 675 million MCA program 
in a USD 925 million rural poverty reduction plan and was 
designed to flow from and be consistent with King Mohammed 
VI's National Human Development Initiative, launched on May 
18 (reftel), and the World Bank's new Country Assistance 
Strategy.  Morocco hopes its MCA program will create 110 
thousand new jobs and reduce poverty from 30 to 20 percent 
in a "corridor of poverty" stretching from the Rif 
mountains, along the Atlas mountains, toward the desert in 
the East.  Morocco's MCA compact proposal will create 
revenue-generating activities for vulnerable communities, 
reduce poverty through "human development" and ensure 
environmental sustainability.  Detailed program plans -- 
including costs, timelines, impacts, sustainability, 
baseline data, and monitoring and evaluation mechanisms -- 
are still needed.  While broad consultations have ostensibly 
taken place at the grass roots level, a national-level 
effort must be made as the compact development process moves 
forward. Grossman and GOM officials agreed to a follow-on 
DVC in early September and an MCC team visit to Morocco in 
late September.  End Summary 
 
A Good Start 
------------ 
 
2. (SBU)  MCC Senior Director for Francophone Africa Michael 
Grossman's August 15-16 visit to Morocco prompted Moroccan 
Government (GOM) officials to present a concrete, but 
preliminary draft proposal for accessing MCA funds.  The 
"draft proposal" was presented to Grossman, DCM and 
EconCouns on August 15 jointly by a 15 person interagency 
team.  The team, led by the Prime Minister's office, also 
comprised the Ministries of Agriculture, Finance, Interior, 
Foreign Affairs, Forestry, Interior, and the agencies 
responsible for developing Morocco's northern and eastern 
regions.  Dr. Haya Bouhia, the Prime Minister's Harvard- 
educated economic advisor who previously worked at the World 
Bank, presented the GOM's vision for using up to USD 675 
million in MCA funds to contribute to Morocco's USD 925 
million rural development program.  The presentation, which 
thoroughly described the structure and context of the 
proposed "integrated and comprehensive" development program 
lacked detail on specific cost figures and did not include 
identification and description of particular development 
programs and activities.  Grossman commented that the draft 
proposal was "a good start," but much work remained to be 
done. 
 
3.  (SBU)  The GOM's USD 925 million proposed rural 
development program targets three main areas -- the Rif 
mountains in the north (USD 270 million), central Morocco's 
Atlas mountain ridge (USD 250 million), and the trans-Atlas 
desert region toward the Algerian border (USD 400 million). 
The proposal will contribute to the new National Initiative 
for Human Development (INDH), announced by King Mohammed VI 
on May 18 (reftel).  The government's INDH plan, which was 
presented to the King on August 20 (septel), addresses three 
main goals in a "participatory approach with integrated and 
coherent planning" with thorough monitoring and result- 
orientation.  The three INDH goals are:  ameliorating the 
social deficit in impoverished rural and urban areas, 
creating revenue generating economic activities and 
employment, and assisting marginalized groups with basic 
needs.  Moroccan officials say the INDH and the component 
MCA program are completely consistent with the World Bank's 
new Country Assistance Strategy (CAS) for Morocco.  In 
addition to improving general governance, the CAS aims to 
accelerate job creation and reduce poverty through four 
initiatives:  improving competitiveness and the investment 
climate, increasing access to basic services, improving the 
education system, and expanding access to water and 
sanitation. 
 
4.  (SBU)  Moroccan officials explained that the MCA-funded 
component on the nation-wide INDH endeavor is an "integrated 
rural development program" targeting Morocco's poorest 
provinces.  Morocco's MCA compact proposal, they argue, will 
create revenue generating activities for vulnerable 
communities, reduce poverty through "human development" and 
ensure environmental sustainability.  The ambitious goal is 
to reduce poverty in the three areas -- dubbed the "corridor 
of poverty" -- from 30 percent to 20 percent by 2010 
(consistent with the UN Millennium Development Goals) and to 
create 110 thousand new jobs.  Twenty-five percent of 
Moroccans (about 7.3 million) live in the "corridor of 
poverty," accounting for 43 percent of the rural poor.  The 
GOM specifically proposed access to basic social services 
and infrastructure, development of revenue-generating 
activities and employment, capacity building and access to 
finance, and natural resource protection and environmental 
sustainability as the four components of the compact, 
however, did not expound upon specific development 
activities or tools that might shed important light on the 
costs associated, anticipated impact, ability to monitor and 
evaluate, and feasibility.  The Moroccans explained that in 
addition to the largest piece, the USD 200 million human 
development component (assumed to be vocational training, 
technical assistance, and education), Morocco's USD 675 
million MCA proposal would include, inter alia, tree- 
planting (USD 150 million), irrigation (USD 30 million) 
livestock production (USD 15 million), rural tourism (USD 75 
million) and sanitation (USD 100 million) 
 
Jettou:  Programs are "Ripe" for Implementation 
--------------------------------------------- -- 
 
5.  (SBU)  Subsequent to the presentation, Grossman, the 
Ambassador and EconCouns met with Prime Minister Driss 
Jettou.  Jettou, joined by Minister-Delegate for Economic 
Affairs Talbi, the Primature Secretary General and Bouhia, 
was remarkably well briefed on the details of the Moroccan 
MCA compact presentation.  The Prime Minister reviewed GOM 
efforts to bolster education, provide health care coverage, 
housing, and to invest in water, electricity, and 
transportation infrastructure, especially in remote regions. 
Jettou explained that MCA would contribute to Morocco's 
endeavors in the "corridor of poverty" to add actions and 
activities that would "solve the social deficit."  He 
reiterated that Morocco's overall MCA vision -- helping 
Morocco attain its development goals -- is drawn from King 
Mohammed VI's May 18 human development speech (reftel). 
Grossman gave a quick overview of MCC structure and function 
and reiterated the need for a single GOM MCA contact person. 
Jettou noted that a person of stature (later revealed to be 
former Casablanca Wali and current Chief of the Agence du 
Nord Driss Benhima) had been identified to lead 
implementation of the five year MCA compact.  The Prime 
Minister promised to provide Grossman the names of a small 
steering group for compact negotiations.  Grossman noted 
that the next stage -- identification and refinement of 
specific project details -- was likely to be challenging. 
He also noted that the Moroccan presentation implied a 
complex and complicated plan that may take much effort to 
coordinate and manage.  Jettou responded that the programs 
that make up the plan are "well known proposals" that are 
well-organized and "ripe" for implementation.  These 
proposals -- on water, trees, palmeries, livestock, and 
rural tourism -- fit into a larger national strategy, 
support FTA implementation, and address poverty.  "We are 
ready," he said, "we are just waiting for the financing." 
 
6.  (SBU)  Grossman's August 16 meeting with Foreign Affairs 
Minister-Delegate Taib Fassi Fihri was friendly and 
relatively informal.  Fassi Fihri -- joined by Reda 
Oudghiri, advisor to MFA Bilateral Affairs Director Amrani -- 
apologized for the GOM delay in completing an MCA 
presentation, but noted the importance of coordinating MCA 
ideas with the King's INDH vision that would "crown" all 
efforts.  Fassi Fihri told Grossman, DCM, and EconCouns that 
MCA would enable Morocco to accelerate the rhythm of the 
INDH plan while encouraging transparency, inclusion, and 
consultation.  He reiterated the dire need in the "cooridor 
of poverty" stretching from the Rif to the Oasis region, and 
repeated the GOM mantra that MCA's contribution would be to 
create revenue-enhancing activities to alleviate poverty. 
Grossman said that any reaction to the very complex Moroccan 
draft proposal would be premature, but that he believe it 
was good start.  Grossman asked Fassi Fihri for a GOM point 
of contact.  The Minister-Delegate responded that MFA 
"generalists" coordinate the government-wide MCA effort, but 
a small GOM MCA team including Bouhia, Oudghiri, and 
Ministry of Finance officials would be named very soon. 
"The Prime Minister is the final arbiter, of course," Fassi 
Fihri noted.  Grossman noted that signing an MCA compact is 
just one step in a long process, a process in which much of 
the work is Morocco's to do.  They concluded the meeting by 
agreeing on next steps (see para. 9. below). 
 
Consultative Process 
-------------------- 
 
7.  (U)  When Grossman and emboffs raised MCA's required 
"consultative process," GOM officials, including PM Jettou 
and Foreign Affairs Minister-Delegate Fassi Fihri noted that 
the "bottom-up" proposals that make up the coherent MCA 
strategy were developed in cooperation with grass roots 
stakeholders by "associative" and representative 
institutions.  Furthermore, they noted, the INDH and the 
World Bank's CAS (upon which the MCA proposal is ultimately 
based) resulted from open consultative processes. 
Nonetheless, GOM officials agreed that when the compact 
proposal was complete, a formal consultative process (e.g. 
seminars, workshops, or informal hearings) that included 
civil society and private sector would take place before 
compact negotiations begin in earnest. 
 
8.  (SBU)  Subsequent to the formal meetings, Grossman spent 
several hours consulting with Bouhia to clarify MCC 
expectations and timelines and to explain MCA processes. 
Most importantly, the GOM will need to provide details of 
specific programs or projects that will e.g. "create revenue- 
generating activities" or "protect the environment."  The 
GOM needs to provide the "what, when, where, why, how, by 
whom and how much."  The GOM will need to provide a more 
detailed presentation of the expected impact on economic 
growth of the proposed MCA program. In addition, the GOM 
will need to analyze and recommend potential changes in the 
institutional or policy environment that will optimize the 
returns on MCA-financed investments.  Bouhia emerged from 
these meetings enthusiastic about the ultimate prospects and 
mobilized to "roll up her sleeves," but a little daunted by 
the sheer amount of work to be done. 
 
Next Steps 
---------- 
 
9.  (SBU)  Having agreed that Morocco's visions and ideas 
are an appropriate point of departure for more detailed and 
technical discussions, Grossman and GOM officials agreed to 
meet by video conference during the second week of 
September.  An MCC team will return to Morocco in late 
September to assist the Moroccans with drafting a proposed 
compact that lays out specific details of projects' cost, 
impact, feasibility, etc.  While the GOM did not, as 
requested identify a single working level MCA point of 
contact, the GOM committed to provide by late August the 
name of a small steering group (most likely three to four 
people drawn from the PM's office, MFA and Finance Ministry) 
that would act as primary MCC interlocutor. 
 
Comment 
------- 
 
10.  (SBU)  Comment:  Jettou, Fassi Fihri and other GOM 
officials are well-briefed and delivered the exact same 
talking points.  Morocco's MCA presentation is an ambitious 
and complex undertaking and at USD 675 million potentially 
the largest MCA compact to date.  The GOM has succeeded in 
embedding its MCA ideas in the broader national human 
development initiative (INDH) and in its comprehensive plan 
to reduce rural poverty.  The Moroccans have at least 
considered the consultative processes which may have 
occurred and those that will be necessary.  Missing are 
detailed plans - including costs, timelines, impacts, 
sustainability, baseline data, and monitoring and evaluation 
mechanisms - for the programs under the GOM's proposed MCA 
structure.  While the GOM refuses to name "the" MCA contact, 
the small steering group Jettou and Fassi Fihri promised to 
establish will help facilitate information flow and 
coordination. 
 
11.  (U)  MCC's Michael Grossman cleared this cable. 
 
 
RILEY