*’No revolutions in Morocco…Under King Mohammed VI, Morocco has held parliamentary & municipal elections for a decade, with greater representation for women than elsewhere in Arab world, and further constitutional reform in 2011. So different from neighbours it attracted $7.9bn for pair of dollar bond deals…faith in long term, clear as can be.’*
Financial Times, by Chris Wright, Beyond Brics/Emerging Markets Hub (Casablanca to Rabat, Morocco, March 1, 2013) — The Arab spring seems a world away on the train from Casablana to Rabat. In one compartment a conversation springs up between a local Moroccan, running a machine parts manufacturing business, and a Saudi from a construction company, visiting Rabat to seek migrant labour to help with the booming development in Saudi’s northwest. Cards are exchanged, then brochures; business is done, right here on the rumbling train.
No revolutions in Morocco; no immolations, no deposing of tyrants, no violent post-independence misery. Under King Mohammed VI, Morocco has held parliamentary and municipal elections for a decade, with greater representation for women than elsewhere in the Arab world, and – in recognition of pro-democracy revolutions in Tunisia, Egypt and Libya – further constitutional reform in 2011.
This is the Morocco so different from its neighbours that it attracted $7.9bn of demand for a $1.5bn pair of dollar bond deals in December, including a $500m 30-year tranche – faith in the long term, clear as can be.
But what’s interesting, here in the railway carriage, is the difference of perspective. To the Brit, the sense is of a place in transition, a notable and growing Islamist tinge to the parliament, a democracy and a constitutional monarchy, yes, but one in which the royal family still has considerable power. A country in which the ardour of foreign investors is at odds with a worsening fiscal condition that has prompted Moody’s to put the country on negative outlook.
To the Saudi, on the other hand, a liberal-minded sort who has lived abroad and sees change ahead, Morocco is exactly the model to follow: a gradual stepping back of the monarchy, allowing for elections, but without imposing change at such a pace that the whole economy becomes unstuck. He looks to Egypt with enormous alarm as an example of the dark side of democratic freedoms: far better to keep a king, he thinks, and to urge him to cede power slowly over time.
To the Moroccan, things are good but could be better. Business is decent, he says, better than last year; he’s more worried about Europe’s economy than insurrection in neighbouring Algeria and Mali. He is not wholly convinced by reform and thinks change could be a little faster. He sees trouble ahead with inevitable changes to subsidy policy – without which the country’s deficits are going to get a whole lot worse – but by and large appreciates a stable business environment he knows is not a luxury his fellow north African businessmen enjoy.
Viewed objectively, Morocco faces challenges. To meet its target of bringing the fiscal deficit down from 7 per cent to 3 per cent of GDP by 2016, it must cut subsidies on staple goods – which Moody’s estimate are equivalent to 6 per cent of GDP – and by doing so risk protests that might shake Morocco’s steadiness. The rating agencies put it on the cusp of speculative/investment grade status – Moody’s ranks it the former, S&P the latter – and there is still a sense that it could head in either of those directions from here.
But for the moment, as business is done and as the train pulls in to Rabat Ville’s gleaming station, long live this peaceful environment.
Chris Wright is a journalist specialising in business and financial journalism across Asia, Australia and the Middle East.