The pluses and minuses of monarchy – Morocco is doing well, but its king still needs to adapt
Jun 11th 2016 Economist
On the night of February 19th 2011, Abouamar Tafnout, an activist from Casablanca, suddenly grew nervous. He had just watched a documentary on the civil war in Algeria. We don’t want that, he thought. Thousands of Moroccans were preparing to hit the streets the next day to challenge King Mohammed VI and the ruling elite, known to locals by the nickname makhzen (“the storehouse”), which controls much of the economy. Mr Tafnout, just 20 years old at the time, had helped to organise the protests. “I was afraid—afraid for the country,” he says.
But most of Morocco’s protesters, like Mr Tafnout, did not want a messy revolution. Rather, they pushed for a more constrained monarchy. When the king increased wages and pensions, and promised to relinquish some power, many were satisfied. A revision to the constitution, strengthening parliament, was passed by referendum in July 2011. Elections were held that November. Some blood was shed, but Morocco’s version of the Arab spring went rather smoothly.
Five years on, Morocco is stable, relatively free and increasingly prosperous. Compare that with the rest of the region and it is little wonder that Moroccans are loth to upset the status quo. “Gradualism” is a popular word, even among those who would like to see their country become more like Spain, where the monarchy is largely ceremonial.
The king still dominates the state, but he is popular. His granting of more rights to women and efforts to tackle poverty have gone down well. Critics say he is a cunning politician. Most Moroccans credit him for the country’s stability. And he has capitalised on the calm by positioning Morocco as a hub for European manufacturers. Tax breaks and good logistics lure business. Car production, led by Renault, a big French producer, has more than doubled since 2011. The aeronautics industry has also taken off.
Renault’s factory has a direct train line to the commercial port of Tanger-Med, 40km (25 miles) east of Tangier, which is expanding. By the time construction is completed, in 2018, it is expected to be the busiest port on the Mediterranean. Morocco is looking south, too. Casablanca Finance City, a public-private initiative, helps local and international firms that want to use the country as a base for their operations in Africa. It is building fancy new office space on the site of an old airport in the city.
As it upgrades its roads and infrastructure, Morocco is bound to experience catch-up growth—GDP grew 4.5% in 2015. But its government has also been clever. Tighter fiscal policy, including cuts to energy subsidies, has helped Morocco reduce its current-account and budget deficits. A drought may slow growth this year, but analysts are still bullish. Morocco could record GDP growth of 5-6% over the next five to ten years.
But not everything is rosy. The monarchy can certainly get things done: big projects, such as the largest solar plant in the world and 1,500km of high-speed rail lines are moving ahead; but the average Moroccan must deal with a stifling bureaucracy. The further you get away from the king, the harder things become. Members of the royal court use their proximity to advance their own projects and win contracts. Morocco ranks a woeful 88th in the world in Transparency International’s corruption perceptions index.
The problem is compounded by a lack of accountability. Take the high-speed rail lines, which should more than halve travel time between Morocco’s big cities. Some have questioned whether the billions of dollars might be better used to help the poor, given that Morocco is in the bottom third of the UN’s human development index. Others wonder if a slowdown in global maritime trade makes the Tanger-Med expansion unwise, or ask why an initiative to boost tourism, Plan Azur, has failed to produce many results. No one in the royal palace seems to be checking.
Don’t expect parliament to provide answers, either. Although the revised constitution gives the government more power over policy and appointments, the king is still firmly in charge. Moreover, the regime has largely succeeded in taming opposition forces. It has co-opted the Justice and Development Party (PJD), a mildly Islamist group that won the election in 2011. The PJD has not pushed for substantial democratic reforms. Yet it still faces a challenge from the Party of Authenticity and Modernity, which is even more supportive of the king, at parliamentary elections scheduled for October.
Journalists and activists criticise the monarchy, which puts them at risk. News outlets have been forced to close and journalists jailed in recent years. Reporters Without Borders, a pressure group, considers Morocco less free even than Algeria or Afghanistan. Consider the case of Ali Anouzla, a critic of the king, who has been accused of “inciting” terrorism. His alleged crime was to link to a video by al-Qaeda in the Islamic Maghreb, which he criticised.
In general, freedom of expression is curtailed by three red lines. Critical discussion of Islam, the monarchy or the disputed territory of Western Sahara is banned. Even so, protests are common in Morocco, over such things as employment and pay. But they are often broken up by police, who tend to use heavy-handed tactics. When protesters questioned the enormous royal budget in 2012 they were beaten.
Many Moroccans are ill-equipped to question their king. Almost a third of the population is illiterate. Others protest in a different way. About 1,500 Moroccans are thought to have joined Islamic State (IS) in Iraq and Syria. Hundreds more are training in Libya, leading to fears that they may return to launch attacks in Morocco. Youth in rural areas, where poverty is widespread, are seen as particularly vulnerable to the terrorists’ message. So the king—who also holds the title, “commander of the faithful”—has created a new religious training institute in Rabat, the capital, to promote his moderate brand of Islam.
The threat of terrorism has also been used as an excuse to silence critics, while the turbulence of the region is cited to dim the ardour of reformists. But by comparing itself with the Arab world, Morocco is setting a low bar. Many of its citizens speak French and Spanish, and would rather look to Europe for inspiration.
The king has encouraged such thoughts on economic matters. But he is thwarting Morocco’s political progress. Little effort has been put into building the institutions, like an independent judiciary, that would be needed in a constitutional monarchy. Still, Moroccans are hopeful. The prediction is that sometime in the near future, Morocco will be a democratic state, the monarchy is smart enough to know that.
FRENCH MANUFACTURERS in MOROCCO
Factories in the sun – European firms bring car making and an aerospace industry to north Africa
Jun 4th 2016 Economist
Considering the help provided to big foreign manufacturers in Morocco over the past few years, it would have taken a serious effort by them to fail. Renault, a French carmaker, for example, is thriving: of 2.8m cars it made globally last year, one in ten trundled out from its two shiny assembly plants in Tangier and Casablanca. It hopes eventually to make 400,000 cars a year. The government provided land, excellent roads and power supply, tax advantages and a dedicated railway line to get the vehicles to an enormous port in Tangier. Official efforts to snip red tape and make it easier for firms to operate, and a penchant for signing free-trade deals, help to explain why foreign-direct investment is soaring, even as it shrivels for its neighbours.
One of Morocco’s main draws is a supply of cheap labour. But it has also spent heavily on infrastructure, and not only for Renault. Its road network, railways, airports and ports are modern and well-maintained. It is handily close to the European home of many of the firms that have invested. But most of all, unlike Algeria, Tunisia and Egypt, which to varying degrees can match these other advantages, it offers political stability. The king, Mohammed VI, has championed a plan to industrialise quickly and create jobs for young Moroccans. They are trying to do in ten years what Britain or France took 80 years to do.
The country’s welcome mat has brought jobs. Four years ago Renault invested €1.6 billion ($2.1 billion) in its main car plant, Africa’s largest, and it now employs nearly 10,000 staff locally. The firm is one of Morocco’s biggest companies. It produces vehicles such as the Lodgy, an entry-level people-carrier sold in Europe. Rapid growth proved possible partly because the king ordained it (his decrees get otherwise languorous civil servants to jump)—for example, in providing generous subsidies for training. Other firms are being lured by Morocco’s largesse. PSA Peugeot Citroën will open an assembly plant in Kenitra, on the Atlantic coast, in 2019, and plans to make 200,000 cars a year.
Domestic sales account for a modest part of production. Marc Nassif, general manager for Renault in Morocco, says locals bought 125,000 cars last year, about two-fifths of them from his firm. More important are car exports that earned Morocco a hefty €4.8 billion last year, making them the country’s biggest single export. That is not a bad record for a country that, until recently, relied mostly on textiles and tourists for hard currency.
Shifting production to lower-cost countries is an old strategy for European carmakers. Renault already has “huge facilities” in Slovenia, Romania, Turkey and Russia, as well as Spain, says Mr Nassif. As wages rise there, cheaper North Africa is more tempting. By one estimate monthly labour costs for Renault workers in Romania or Turkey are around €950, compared with €350 in Morocco.
Other factors also help to explain Renault’s expansion. Carmakers are relying on sales in new markets to keep growing. African consumers are a long-term bet. To make vehicles that will appeal to their customers, carmakers like to keep production close so they can tweak to satisfy local tastes. You must manufacture where you sell.
Cheap and well-trained locals and official munificence explain a boom in another manufacturing industry, aerospace. Its growth was also ordained by Morocco’s king just over a decade ago. Now some 100 firms, including Bombardier, Safran, UTC, Hexcel and Eaton, employ 11,500 people, mostly in a tax-free zone by Casablanca airport. An industry veteran says the goal is to double that workforce, at least, by the end of this decade.
Hamid Benbrahim el-Andaloussi, who heads the industry’s trade body, says a starting monthly salary in aerospace is equivalent to $400 or less, rising to $800 for middle managers. Fitting wiring is more akin to craft than mass production, so high-quality workers are crucial, too. Morocco’s government funds a facility run by the firms—similar to support for the car industry—to train some 800 workers each year. It is being expanded.
In Safran’s factory in Casablanca, workers assemble nacelles—structures encasing engines under aircraft wings—and fit honeycomb composites that help to muffle the screams of jet engines. Finished goods can reach Toulouse, Airbus’s headquarters, in southern France within three days, by lorry and ship.
Such industries are reshaping Morocco’s economy. But assembly does not bring the bigger gains of higher-value work, such as research and design, nor create a wider system of local suppliers. Mr Nassif expects local firms will eventually supply two-thirds of components at Renault’s Tangier plant, though he does not say when. Creating a supply chain is hard in aerospace, says a manager at Matis, a joint venture between Safran and Boeing for aircraft wiring. Suppliers are expected to share in the investment costs and risks of developing new components. The next job—getting small, local firms to flourish—will prove tougher than luring big foreign ones in the first place.
